The second largest private sector bank in India, HDFC Bank, has increased its base rate by 0.2% to 9.8%. The rate hike is effective from August 3, 2013.
The private lender became the second bank to hike its minimum lending rate after the Reserve Bank of India’s (RBI) first quarter monetary policy review on July 30, 2013.
Earlier, YES Bank had increased its base rate by 0.25% to 10.8%.
Prior to the base rate hike, to the base rate hike, HDFC Bank had raised its deposit rates on maturities ranging from 7 days up to 6 months by 1% points.
Rival Axis Bank had also increased short-term deposit rates by 0.5% to 2.25% points even though the private lender is yet to revise its lending rate. While RBI has kept the key policy rate unchanged in its monetary policy review, its liquidity tightening measures in the past few weeks have impacted the short-term rates.
The central bank - RBI on July 15 capped bank’s borrowings under liquidity adjustment facility & increased the marginal standing facility rate by 2% points to 10.3%. The measures have led to an increase in cost of funds & bankers had said if the steps are not rolled back, soon their margins would get affected. Bankers also indicated that if deposit rates hardened, they would have to increase lending rates to protect their margin.
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